CHAPTER 16 | Cost for Decision Making | |
| 河北农民报 |
E16.7. | |
a. | Differential cost: What costs will differ if a friend comes along? |
b. | Allocated cost: How to allocate? Bad on number of people, weight, number of suitcas, or what? |
c. | Sunk cost: 金针菇瘦肉汤What costs have already been incurred and cannot be recovered, even if you don't make the trip? For example, the cost of the car is a sunk cost. |
d. | Opportunity cost: What are other opportunities for you to earn revenue? What is the cost of alternative travel for your classmate? |
E16.9. | |||
Differential cost analysis: | |||
Incremental lling price ($72 - $58)……… | $ 14 | ||
Incremental costs of further processing…… | (13) | ||
($72,800 / 5,600 gallons) | |||
Incremental Profit………………………….. | $ 1 | ||
Yes, the new compound variant should be sold as is for $72 per gallon. Further processing will result in an increa in profits of $5,600 (5,600 gallons x $1 incremental profit). | |||
E16.11. | ||
a. | Raw materials per unit …………………………………………………… | $6.00 |
Direct labor per unit ……………………………………………………… | 6.00 | |
Variable overhead per unit………………………………………………… | 东北的冬天8.00 | |
Fixed overhead per unit …………………………………………………… | 4.00 a | |
Total cost per unit ………………………………………………………… | $24.00 | |
(a) The fixed overhead per unit is bad on the total fixed overhead for the year of $480,000 divided by the current output of 120,000 units per year. | ||
b. | The above calculation includes an inappropriate unitization of fixed expens. Unless the additional production of 20,000 units results in a movement to a new relevant range, total fixed expens will not change. | |
c. | The offer should be accepted becau it would generate a contribution margin of $4 per unit (revenue of $24 per unit less variable cost of $20 per unit). | |
E16.13. | |
a. | Canton Company would consider the following costs as relevant to the decision to enter the digital binocular market: design and engineering costs, new equipment, raw materials, direct labor, variable overhead, any possible new fixed overhead costs such as a production supervisor that may be dedicated to this product line. Note that no new facility costs are required for this product line since the current plant has enough square footage to accommodate the new product line. |
b. | Target cost = Selling price – Desired profit Target cost = ($49 * 20,000) – ($2,500,000 * .10) Target cost = $980,000 – $250,000 Target cost = $730,000 Target cost per unit = 730,000 / 20,000 units Target cost per unit = $36.50 |
E16.15. | |||||
| 路上行人 | Current Production Costs | Avoidable Cost if Purchad | Cost to Buy | ||
Manufacturing costs: | |||||
Direct material…………………… | $ 360 | $ 360 | |||
Direct labor………………………. | 180 | 180 | |||
Variable overhead ($180 x 30%). | 54 | 54 | |||
Fixed overhead ($180 x 70%)….. | 126 | 0 | |||
Total cost per unit ………………… | $ 720 | $ 594 | |||
Purcha costs: | |||||
Engine asmbly ……… | $ 620 | ||||
Advantage to make……………… | $ 26 | ||||
Eldon Engine, Inc. should continue to produce the engine part ts becau the costs it can avoid by buying the part ts are less than the outside purcha cost. | |||||
E16.17. | |||
Product S | Product T | ||
Contribution margin per unit………………………….. | $ 150 | 驱动备份$ 200 | |
Machine hours required per unit………………………. | 3 | 4 | |
| 斗破天穹 Contribution margin per machine hour………………... | $ 50 | 春天的画大全$ 50 | |
Since both products generate the same amount of contribution margin per machine hour, any production mix combination of Product S or Product T will yield $30,000, the maximum amount of contribution margin available on 600 machine hours ($50 contribution margin per machine hour x 600 machine hours). | |||
E16.19. | |
a. | 0 1 2 3 4 5 $50,000 0.6806 (Table 64, 5 period row, 8% column) $34,030 |
b. | This is a future value problem, the opposite of prent value. As shown in the diagram, $34,030 invested today at 8% interest compounded annually would grow to $50,000 in five years. |
c. | Less could be invested today becau at a higher interest rate, more interest would be earned. This can be en by calculating the prent value of $50,000 in five years at an interest rate greater than 8%. As can be en in Table 64, the prent value factors are smaller as interest rates get higher. |
E16.21. | |
a. | If the investment is too high, the net prent value will be too low. |
b. | If the cost of capital is too low, the net prent value will be too high. |
c. | If the cash flows from the project are too high, the net prent value will be too high. |
d. | If the number of years over which the project will generate cash flows is too low, the net prent value will be too low. |
E16.23. | |
梦见好多屎a. | 0 1 2 3 4 5 6 7 8 Investment………… $(230,000) Annual cash flow………………………$40,000 per year Salvage value…………………………………………………….. $26,000 5.3349 (Table 65 0.4665 (Table 64 $(230,000) 8 period row, 8 period row, 213,396 10% column) 10% column) 12,129 $ (4,475) net prent value |
b. | Becau the net prent value is negative, the internal rate of return on this project will be lower than the cost of capital of 10%. |
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